Written Ministerial Statements

Wednesday 18 March 2009

Business, Enterprise and Regulatory Reform

Merger Fees

The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas):
In 2006, the then DTI announced that it was increasing the level of the fees charged to merging parties in order to recover the costs incurred by the competition authorities in undertaking their statutory merger control functions. It was decided that the increase would be introduced in two stages with an initial increase coming into effect in April 2006 and a further stage coming into effect in April 2009.

I have decided to postpone introducing that second stage of the planned increase in merger fees. Having reviewed what has happened in the period since the first stage of the increase came into effect, it is clear that there has been a change in circumstances which suggests the planned increase would not, in fact, generate sufficient funds to recover the full cost of operating the merger control regime.

We therefore propose to re-examine the costs involved in operating that regime and to consult on a suitably revised fee structure as soon as possible with the aim of making an appropriate order to introduce revised merger fees at the earliest opportunity.

Background

There are currently three merger fee bands set at £15,000, £30,000 and £45,000, respectively. The lower fee band applies to mergers where the UK turnover of the enterprise being acquired is £20 million or less; the middle fee is applicable where the UK turnover of the enterprise being acquired is more than £20 million but less than £70 million; and the highest fee is applicable where the UK turnover of the enterprise being acquired exceeds £70 million.

The increase that had been planned for implementation in April 2009 would have increased fee levels to £30,000, £60,000 and £90,000, respectively.

Based on an assessment of the number of mergers taking place during the two to three year period prior to 2006, it appeared likely that this fee structure would generate an amount approximately equivalent to the average annual expenditure of the Office of Fair Trading and Competition Commission in undertaking their merger control functions. We consider it appropriate that those costs should be met by the companies involved in carrying out mergers rather than by the taxpayer.

Having reviewed what has happened in the period since 2006, it is clear there has been a considerable reduction in the total number of mergers being considered by the competition authoritieswhile the annual costs of operating the merger control regime have remained 18 Mar 2009 : Column 52WS
largely unchanged as fixed costs represent a substantial proportion of the total costs. The result is that the proposed increase in fees is likely to generate only about two thirds of the total costs allocated to merger control activitya gap of some £3 million to £4 million. In the light of this, we propose work with the competition authorities to examine the prospects for reducing costs; to re-examine the cost base used as the basis for setting the fees and then to develop a revised fee structure that provides for full cost recovery in future based on that cost base.

Treasury

Provisional Debt Management Report 2009-10

The Economic Secretary to the Treasury (Ian Pearson):
The Provisional Debt Management Report 2009-10 is being published today as required by the Code for Fiscal Stability. Copies are available in the Library of the House. The final Debt and Reserves Management Report 2009-10 will be published alongside the Budget in the usual way.

Defence

Surface Ship Support (SSS) Programme

The Secretary of State for Defence (Mr. John Hutton):
Hon. Members will wish to be aware of an update to the progress being made with the alternative contracting arrangements for surface warship maintenance and repair. These arrangements were signalled in December 2005 as part of the wider defence industrial strategy and todays announcement is an important step towards ensuring that the capability requirements of the Royal Navy continue to be met now and in the future.

Surface warship upkeep contracts were awarded following competition while operational (or fleet) time support was delivered through partnering arrangements under the warship support modernisation initiative. While these arrangements have delivered clear value for money benefits to the Ministry of Defence (MOD), force level reductions coupled with over capacity in the surface ship repair market prompted a review. The MOD, in consultation with industry, undertook a study (the surface ship support study) to identify the optimum approach for the future maintenance and repair of surface warships (aircraft carriers, major amphibious vessels, destroyers, frigates and mine warfare vessels) that would deliver the most efficient, effective and sustainable support policy and offer best value for money for defence as well as to taxpayers.

In 2005, the study concluded that the option best able to meet the needs of both the Department and industry would be the formation of a surface warship support alliance, which would include current providers of surface warship upkeep and fleet time support. To take this forward, the MOD entered into detailed dialogue with industry to explore the feasibility of delivering such 18 Mar 2009 : Column 53WS
support through an alliance. The written ministerial statements made on 14 February 2006, Official Report, columns 72-73WS, announced this exploratory phase. During this time competition policy would be suspended to enable the alliance concept to be developed and tested progressively in a controlled manner. An order was made by my right hon. Friend the then Secretary of State for Trade and Industry (now Business Enterprise and Regulatory Reform), the Member for Kingston upon Hull, West and Hessle (Alan Johnson), excluding the maintenance and repair of surface warships from the UK Competition Act 1998. These arrangements were subsequently extended in 2008, and announced in a written ministerial statement on 25 March, Official Report, columns 3-4WS.

Over the past 12 months, good progress has continued to be made in this crucial warship support area. Working closely with the two dockyard companiesBabcock and BVT Surface Fleet LtdMOD has confirmed that the alliance option is the optimum solution for providing effective, affordable and sustainable support to Royal Navy surface warships. As a result, we have signed a non-legally binding accord with the two companies that set out the principles by which the alliance will operate. The alliance, subject to successful completion of the concept phase and further approvals as well as consultation with the trades unions, is expected to be fully implemented by 2011.

Once the alliance has initially stood up, expected to be later this year, the SSS programme will be implemented in phases. It will commence with a proof of concept phase to allow demonstration of success against agreed criteria as a pre-requisite for moving to the subsequent phases. This approach will minimise risk to MOD, Babcock and BVT Surface Fleet Ltd, and will allow the necessary assurance and scrutiny to take place as the programme develops, experience grows and benefits are realised. For that reason, the regulatory impact assessment (RIA) that supports the exclusion of surface warship support work on public policy grounds from the UK Competition Act has been extended for a period of up to 24 months.

The new arrangements help to promote a sustainable industrial base that retains key operational support and system upgrade capabilities within the UK, and are therefore vital to our ability to maintain and support the Royal Navy. We will continue to work closely with industry in a spirit of transparency and trust to ensure more effective joint planning for the longer-term and that the alliance delivers benefits to the Royal Navy, industry and British taxpayers.

The SSS programme remains a key tenet of the overall maritime change programme and it will play an important part in meeting the needs of the Royal Navy in the future.

Joint Strike Fighter Aircraft

The Secretary of State for Defence (Mr. John Hutton):
We have decided to procure three instrumented test aircraft and associated support equipment to enable UK participation in the joint Initial Operational Test And Evaluation (IOT&E) of the Joint Strike Fighter (JSF) Air System alongside the US Services, and to 18 Mar 2009 : Column 54WS
continue our contributions to the production sustainment and follow-on development (PSFD) memorandum of understanding (MOU).

This decision will allow the UK to fulfil our plans to participate fully in the IOT & E programme alongside the USA and represents the next crucial stage in the UKs incremental plan to introduce JSF into service and fully to understand the aircraft through-life. In particular it will enable us to confirm that we will fully meet the UKs operational sovereignty requirements for JSF and also to fulfil our obligations for UK release to service, proving the general airworthiness of the aircraft and its ability to operate safely and effectively, in combat conditions.

Acquisition of JSF will provide the UK with an unrivalled fifth-generation tactical air system, designed with stealthy characteristics and advanced sensors, which will afford the UK a step change in capability. Through conducting the IOT & E programme jointly with our US partners, who have many years of experience in operating this type of capability and the technologies inherent within it, we will gain a unique opportunity to optimise our use of this new combat system. This decision is fully coherent with our earlier decision to procure the UKs new aircraft carriers and will enable us to move forward effectively in developing our carrier strike capability.

With approximately 100 UK companies currently in the supply chain, there is significant UK industrial interest in the JSF programme ranging from major UK JSF industrial partners such as BAE systems and Rolls-Royce to providers of key sub-systems such as Martin Baker and GE Aviation, and down to lower tier suppliers of composite materials. The potential UK return on investment is substantial. Over the lifetime of the JSF programme, depending on aircraft costs and numbers ordered, overall expenditure with UK industry is likely to outweigh by far the UK MODs investment in the programme.

Justice

Bernard Lodge Inquiry

The Parliamentary Under-Secretary of State for Justice (Mr. Shahid Malik):
Barbara Stow, a former Assistant Prisons and Probation Ombudsman, was appointed to Chair an investigation into the death in custody of Bernard Lodge, who died in HMP Manchester on 28 August 1998. Public hearings were held in September and October 2008.

On 23 February 2009, I agreed to convert the Bernard Lodge investigation to an inquiry held under the Inquiries Act 2005, following representations from the Chair. The investigation was so converted in accordance with section 15 of the Inquiries Act 2005. Barbara Stow shall remain Chair and no other members are to be appointed to the inquiry panel. The terms of reference of the inquiry, as detailed in Annex 1 of the Chairs procedures dated 10 January 2008, shall remain the same. The terms of reference can be found at :

Prime Minister

Detainees

The Prime Minister (Mr. Gordon Brown):
Our security and intelligence services and armed forces do an outstanding job. They take significant personal risks to make Britain more secure and operate across the world in circumstances they do not control. I have seen for myself their success in preventing terrorist attacks. We are all safer today because of the work they do with integrity and bravery. In the last months, the involvement of the security services and armed forces in detention activities has been under intense scrutiny while they have been unable to reply.

Britain condemns without reservation the use of torture for any purpose. Torture has no place in a modern democratic society. We will not condone it. Nor will we ever ask others to do it on our behalf.

It is to protect the reputation of our security and intelligence services and to reassure ourselves that everything has been done to ensure that our practices are in line with United Kingdom and international law that we will do four things:

we will publish our guidance to intelligence officers and service personnel about the standards that we apply during the detention and interviewing of detainees overseas once it has been consolidated and reviewed by the Intelligence and Security Committee. It is right that Parliament and the public should know what those involved in interviewing detainees can and cannot do. This will put beyond doubt the terms under which our agencies and service personnel operate. Once published, copies will be placed in the Libraries of both Houses;

we will invite the Sir Peter Gibson who is the former Lord Justice of Appeal and current Intelligence Services Commissioner to monitor compliance with the guidance and report to the Prime Minister annually;

in order to ensure that our systems are robust and to be certain that any lessons have been understood, I have asked the Intelligence and Security Committee to consider any new developments and relevant information, since its 2005 report on detention (cm 6469) and its 2007 report on rendition (cm 7171), building on the follow-up work that they have already undertaken;

wherever allegations of wrongdoing are made, they are taken seriously. Some detainees have already put their allegations before the civil courts, where they can and should be tested. If any cases of potential criminal wrongdoing come to light, the Government will refer them to the Attorney-General to consider whether there is a basis for inviting the police to conduct a criminal investigation. Any decisions on prosecutions will be reached only after such an investigation.

We are fortunate to have the best security and intelligence services and armed forces in the world. They are highly effective, widely respected and operate unselfishly on our behalf. It is vital that we allow them to act to protect our country. But we must do so in a way that is 18 Mar 2009 : Column 56WS
consistent with our unequivocal commitment to human rights. I am confident that this is the case.

Attorney-General

Criminal Proceedings for Fraud

The Solicitor-General (Vera Baird):
My right hon. Friend the Attorney-General has made the following Written Ministerial Statement:

Last year the Government published two consultation papers on measures to improve the effectiveness of fraud prosecutions. The first consultation paper, in relation to a proposed framework for plea negotiation between defence and prosecution in fraud cases, was published in April. The second, concerning proposals to strengthen the powers of the Crown Court to deal with fraud, was published in July.

The Government are today publishing a paper summarising the responses received in both these consultation exercises, and setting out how we will take these proposals forward. The measures form part of the National Fraud Strategy which is being published in full tomorrow.

In general the responses that we received to the two consultations were positive, with many respondents agreeing in principle with the measures proposed. Many helpful suggestions were received as to their practical implementation.

In relation to the plea negotiation framework, I am now issuing Attorney-Generals guidelines to prosecutors to bring this into effect shortly. The guidelines set out a clear and transparent procedure for prosecutors to engage in discussions with defence legal representatives at an early stage in a fraud case with a view to narrowing the factual issues and, where possible, agreeing what charges the defendant will plead guilty to. This procedure is designed to help complex cases progress through the criminal justice system in a quicker and more efficient fashion, while protecting the interests of the public and victims of fraud, and respecting the rights of defendants.

In relation to the extended sentencing powers for the Crown Court, the Government intend to bring forward legislation extending the range of fraud victims who will be eligible for compensation, and strengthening the enforcement measures available to the courts to see that compensation orders are paid. Legislation is also planned to allow the Crown Court to bar convicted fraudsters from practising in certain key professions, and to wind up companies that have been used as vehicles for fraud. These measures should reduce the need for duplicated criminal, civil and regulatory proceedings, and also strengthen confidence in the ability of the courts to protect the public from fraud and compensate victims. This legislation will be introduced as soon as the Parliamentary programme allows.

The National Fraud Strategy, being published tomorrow, meets a key recommendation of the 2006 Fraud Review. Produced and co-ordinated by the National Fraud Strategic Authority, it will be implemented with partners across the business, public and voluntary sectors.

Copies of the paper The Introduction of a Plea Negotiation Framework for Fraud Cases in England and Wales and Extending the Powers of the Crown Court to Prevent Fraud and Compensate Victims: Summary of Responses to Consultation Papers have been placed in the Libraries of both Houses. Copies of the National Fraud Strategy will be placed in the Libraries of both Houses tomorrow.